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What an NFL Lockout Would Mean to Small Businesses

A season without pro football could lead to a loss of profits or, even worse, a need to shut down for small businesses around the nation.
Small businesses around the nation depend upon NFL Sundays for a large chunk of their yearly revenue. A lockout could mean huge losses for many.

Stadium View Bar & Grille sits merely 150 yards away from historic Lambeau Field, home to the 2011 Super Bowl Champion Green Bay Packers, in Wisconsin. For 19 years owner Jerry Watson and his employees have been serving loyal Packers fans. But that Sunday tradition is in limbo if the pending NFL lockout happens (as is expected when the current Collective Bargaining Agreement expires at 11:59pm ET tonight).

Voted one of the top football and sports bars in America by Draft Magazine, Forbes, Esquire and MSN City Guides, the 5-acre property is legendary to tailgaters, averaging three live bands, three DJs, and 100 part-time employees to manage anywhere between the 6,000-8,000 people that show up for a standard Packers home game.

"Those ten NFL Sundays (8 regular season, 2 preseason games) account for about 1/3 of my business in a given year," notes Watson. "The Sundays where the Packers are out of town drive three times as much business as a non-football Sunday. Without an NFL season, I would drop about $750,000 in gross income for the year. How are you supposed to make that up?"

The story is similar across the United States for restaurants, bars, merchandise shops and more in towns proud to call NFL teams home.  As much as they love the league, they rely heavily on revenue from football games to drive their business.   The NFL is an estimated $9 billion business.  But if the team owners lock out the National Football League Players' Association (NFLPA) many small businesses will be affected.

A study released last month by Edgeworth Economics highlights the potential impact of a canceled NFL season.  The study states that every city with an NFL franchise stands to lose about $160 million in revenue ($20 million per home game), $5 billion total, and an aggregate of 115,000 jobs. The study was commissioned by the NFLPA.  Taking it a step further, Buffalo mayor Byron Brown has gone on the record stating that the city, by far one of the league's smallest markets, would lose $140 million in economic benefits from a season-long NFL lockout.

The key sticking points remain with the owners wanting concessions on many issues, most notably an 18-game regular season, a rookie salary cap, and a pay cut in the players' share of the overall revenue. But while the negotiations remain between owners and players at this point, the impact on the American economy is much deeper.

"The NFLPA has been holding events around the league at small towns to talk to small business owners about the pending lockout," says Liz Mullen, a reporter who covers agents, unions and labor for the Sports Business Journal. "For a lot of those family-owned businesses, every NFL game is like Christmas in terms of revenue, even though it's only a small portion of the year."

Can businesses who rely so heavily upon fall Sundays come up with innovative business ideas to make up for that potential loss in business? In most cases, that's nearly impossible.  New York City bar owner Michael Sinensky wrote on the Huffington Post last week that "the cancellation of next year's NFL season would be the final knockout punch for many small businesses like mine." In it, he also states that the profits earned at his four bars would be completely wiped out by a lack of football.

"There's no reason to try to make alternative plans to make up for that loss," says Watson. "Because I can't control God here. As a small business owner, is it frustrating that greedy young kids, the players, are battling over money with greedy old men as owners? Absolutely, especially when you consider the amount of money they are arguing about."

Another small business that will be affected that many don't even consider small business is NFL agents, typically individuals who have established themselves in the industry and who sometimes are affiliated with larger organizations. When most fans think of agents, they think of the inspiration for the movie Jerry Maguire, Drew Rosenhaus, and other guys pulling in enormous commissions off giant player contracts. But in a lockout, those agents wouldn't get their cut, either.

"NFL agents get paid at the end of the year after their clients do," Mullen says. "They get paid directly by the client after they've earned all of the money. So if as an agent, you get the maximum of 3% on a contract, you can get that only after the games are played. If games are not played, you're going to have agents losing all of that money."

An NFL lockout would also impact other industries such as Wilson, the company who produces all of the footballs used by the NFL. Wilson is by no means a small business, but they utilize many factory workers to make the 36 balls needed for every single game. Without a season, there'd be no need to produce all of those balls. Additionally, what about all of the businesses in different NFL cities that rely on local players to help in their advertising campaigns? As it stands now, the NFLPA would be able to sign sponsorship deals with competing non-NFL sponsors as of March 4 at their own discretion. That throws a wrench into many big businesses that spend heavily to be an NFL sponsor.

So while the heart of this argument and debate revolves around big money properties (team owners and wealthy players), the effect on the nation's economy would be considerably greater and have a massive effect on small business. At its core, football is the most popular American sport.

What would a season without pro football do to small businesses? Many would rather not find out.

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IMAGE: Matt Ludtke/Getty
Last updated: Mar 3, 2011




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